MOHAN GUPTA Vs. ENFORCEMENT OFFICER

JUDGEMENT

(1.) The arguments advanced by Mr. A. Ragunathan, learned senior counsel representing the counsel for the petitioner and that of Mr. K. Ramasamy, learned Special Public Prosecutor representing the respondent were heard. Records produced on both sides were also perused.

(2.) This petition has been filed under Section 482 Cr.P.C seeking an order quashing the prosecution launched against the petitioner in C.C.No. 407 of 2002 on the file of the Additional Chief Metropolitan Magistrate, E.O.I, Egmore, Chennai wherein he has been arraigned as A4. The offences alleged are punishable under Section 56(l)(i) read with sub-sections (3) and (4) of Section 19 of the Foreign Exchange Management Act, 1999. The first accused is a company by name Pappilon Exports Ltd., and the other three accused are said to he its Directors, who were responsible for the conduct of the business of the said Company at the time of the commission of the alleged offences. The petitioner herein was admittedly a Director of the said Company. However, the prosecution launched against him is sought to be quashed on the sole ground that whenever a person is sought to be prosecuted holding him vicariously liable for the acts of the Company as the Principal offender, necessary averments providing details as to how he was involved in the management of the business of the Company should have been made and in the absence of such averment, such a prosecution of a Director of the Company cannot be maintained.

(3.) Mr. A. Raghunathan, the learned senior counsel drawing the attention of this Court to two recent judgments of Hon'ble Apex Court in Ramrajsingh v. State of Madhya Pradesh and Another, 2009 6 SCC 729 and National Small Industries Corporation Limited v. Harmeet Singh Paintal and Another, 2010 3 SCC 330, argued that an analogous provision in Section 141 of the Negotiable Instruments Act 1881 providing for vicarious liability of the Directors of the Company/partners of a firm etc., was interpreted in such a way that prosecution for an offence under Section 138 of the Negotiable Instruments Act committed by a company cannot be sustained in the absence of necessary pleadings as to how the Director/Partner or other person was responsible for the conduct of the business of the Company. It is true that in those judgments, the Apex Court has held that the repetition of the magic words found in the statutory provision shall not be enough and there must be further details as to the manner in which one was involved in the conduct of the business of the Company to be held vicariously liable for the offence committed by the Company.